The critical flaw at the heart of modern customer relationship thinking

When I was working as a Senior Consultant with The Peppers & Rogers Group the customer paradigm was explained through the analogy of a small grocer (or florist) serving his/her local community.  The thrust of it was that the grocer got to know the customer- the person, his circumstances, his shopping history, his attitude, his values, his beliefs, his preferences – and used this knowledge to offer him the right products, at the right time, at the right price in the right way.  The end point – this is important – we have the technology to recreate that kind of business relationship with our customers.

What the analogy leaves out is the social context.  In days gone by the local grocer (or any other shopkeeper for that matter) was living in the same community as his customers.  He was likely to come across his customers in the social life of the local community.  Some of the customers used to be fellow students at school, others went to the same church, others frequented the same pub, others were friends of friends and so forth.

In short the grocer’s relationship with his customers was much a social one as an economic one; he experienced his customers as rounded multi-dimensional human beings not as one-dimensional economic objects nor as abstractions on a revenue statement. Because of the shared local context the customers also invested in the grocer – they knew the grocer in a rounded context and not just as an economic entity, a grocer.

Furthermore, the owner was also the CEO and the person having the daily contact with customers – listening, talking, interacting, serving customers.

That situation today for Mr Multi-National Enterprise (Mr MNE) is completely the opposite.  There is no social relationship between Mr MNE and the customer – they typically live and move in very different social circles.  The customers do not have to support Mr MNE (like they did with the grocer – else no local grocer) and Mr MNE can find other than local customers – the world is full of potential customers.  And importantly, Mr MNE is completely divorced from the customers – he never has to see, talk with or serve a customer.

So whilst the technology exists to gather information, the all-powerful social context that is necessary for building enduring mutual win-win relationships is absent.  And that is the critical failing at the heart of modern customer relationship thinking.  It misses the fact that relationship are a natural by-product of a social context.  That social context  is missing from the modern corporate world and it cannot be recreated in the typical tenure of the CEO.

Posted on September 29, 2010, in Uncategorized and tagged . Bookmark the permalink. 2 Comments.

  1. I fully agree (except, perhaps, with the last sentence).

    The proverbial small retailer is (for me, too) the epitome of both ‘conventional CRM’ (customer insight and differentiation) and ‘social CRM’ (having multiple relationships with the customers in overlapping ‘parallel universes’ outside the business).

    We mustn’t forget that ‘Mr MNE’ does not, in fact, exist – there is no such persona. There is a multitude of individuals, many of which have direct relationships with some customers. Some of those inside the MNE (employees, managers, occasionally shareholders) happen to be customers of the same business, too. As are some supplier employees or distribution partner managers… The permutations are endless, but this is exactly what social networks are about (they are real multitudes of interconnected individuals – not some website called ‘Facebook’).

    If this is properly understood and business thinking is aligned with the concept of ‘social’ – a lot can be done during a CEO mandate. Such radical change doesn’t happen overnight, but measurable progress can be achieved in a year or two.With clear benefits for all parties (including shareholders – for whose benefit the CEO was appointed in the first place).

    How? …

    Watch this space ;-)

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  2. Hello Vladimir, I thank you for taking the time to share your thinking.

    In my way of thinking there is a Mr MNE and it is often the CEO. Sometimes it can be the Board. The CEO and/or the Board are the resource holders, the decision makers – directly by doing or indirectly by omission – they get to decide what game (strategy) the organisation plays. The folks in Customer Services, for example, can only have the interactions with customers which are permissable in the play designed by the Top (CEO / Board).

    On the social front I am and am not in agreement with you. Yes, Mr MNE can engage with customers through social media – the opportunity is there. No, I do not believe that Mr MNE is actually willing to give up control and invisibility to engage openly with customers as equals. For many Mr MNE’s this is simply a step too far. And yet without this step there is no social context and without this context talking about relationships is pointless – even a red herring.

    However, I could be mistaken and there will be a dramatic change – like the collapse of the Berlin Wall.

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